Chess founder David Pollock has a desk lined with crystals that channel energy around his office. Stuart Anderson finds out what else has helped elevate his company into our Fast 100.

“Just take BT on,” says David Pollock, founder of business telecoms reseller Chess, when asked about his competitors. “There’s no point in us just scrabbling around against each other. BT still dominate 75 per cent of the business market – they’ve got too much market share and they charge way too much.”

Pollock’s unabashed sales pitch goes some way to explaining the growth his company has achieved of late. Chess’s position in our Fast 100 was sealed by sales growth of 423 per cent over a two-year period – with turnover increasing from £3.4 million in 2004 to £17.7 million in 2006. Over the same time, pre-tax profits at the Alderley-Edge-based business grew from £245,686 to £3.1 million. Pollock credits the company’s ability to make a profit while growing quickly to “running a tight ship”.

“I’m a stickler for quality,” he says. “And the key thing, you know, is ‘cash is king’. Watch your money – we’re very good on financial control.” What really excites him, however, is the company’s “Blueprint For Success” – a glossy extended mission statement that sets out the company’s objectives (including targeted growth of 100 per cent per year), its expectations of staff and the cornerstones of “Chess culture”.

“It lists our 12 critical success factors, and everybody’s key performance indicators link back to the Blueprint,” he explains. “Everybody knows what’s expected of them on a day-to-day basis: we use the Blueprint for everything we do, from interviewing to disciplinaries.

“Every time I do my monthly stand-ups we look at the Blueprint. I think it’s a fantastic document – it’s made a huge difference, certainly in the last 12 months.”

His world is clearly not that of your average no-nonsense Northern boss. In fact David Pollock, who was educated privately in Altrincham but spent two years working on music videos and, at one stage, producing pilot episodes of “Knight Rider,” in Los Angeles as a young man before returning to Cheshire, fits much more into mould of the transatlantic tech entrepreneur.

He’s definitely a modern dad rather than a Victorian patriarch to the Chess family, but his influence is no less pervasive for that. The New Agey feng shui offices, staff massages, bowls of fruit and lectures on the importance of health, fitness and spirituality seem, in their own way, as totalitarian as any 19th-century mill – and Pollock’s manner is not that of a man to be crossed lightly.

The business is what’s known in the trade as a “value-added reseller” of telecoms services to businesses throughout the UK. These include mobile and Blackberry services and hardware, voice over IP (making calls using the internet), and data solutions (communicating data around a business’s network). Its biggest service, though, is fixed lines for small and medium-sized businesses, using the BT network. Pollock says that by going through Chess rather than BT, businesses can save up to 15 per cent on line rental.

The company’s growth has been boosted significantly by acquisitions – 16 of them in 30 months – though Pollock is keen to emphasise the role of organic growth in the company’s success. Acquisitions have generally – though not in all cases – been purchases of client bases and assets rather than entire businesses.

“Unless you reach a critical mass it’s not viable for you to stay in this market,” Pollock says. “It’s becoming so competitive that a lot of our smaller contemporaries are choosing the exit route. Some of them exit completely but others sell their assets to Chess then continue to work with us as a partner – and that’s proving a very successful formula for us.”

Pollock refuses to be drawn on which transactions have represented the best value, but does highlight the June 2004 acquisition of Eurocall’s mobile operation, which was spun out following the acquisition of the parent company by Your Communications in March of that year.

“Chris Morrisey and Warren Pryer came from Eurocall with that acquisition, and they have been critical to our success – they’re a couple of really good guys who have really helped Chess grow organically,” he continues.

The various acquisitions, the most recent of which at the time of going to press included Nationwide Telecom, Activ Telecom and You Telecom, were funded, Pollock says, “out of our own resources – we’ve been around for 13 years and we’ve made some money along the way”.

The company also has a rolling credit facility from Royal Bank of Scotland, which enables it to swoop on rivals whenever it sees an opportunity – and the company hopes to complete more deals before the year’s end. Pollock owns around 84 per cent of Chess, an unquoted public company, with the remainder split mainly among members of senior management. As well as buying up competitors left, right and centre, it has also been subject to numerous offers itself, he says.

“We get approached all the time but, no, I’m not interested thank you very much,” he asserts. “We’re enjoying growing the business. We’re enjoying the journey – and it’s a journey, not a destination.”

It is helped on its way, Pollock continues, by a business model relying on more than 200 “partner” organisations that do much of Chess’s selling for it.

“Our business partners generate the contracts and they sell the line rental,” he explains. “These partners are invariably organisations with multiple aspects to their businesses and access to different companies.

“Some of them have their own businesses that sell phone systems, and others sell electricity or gas. We also have affinity relationships with people like the Forum of Private Business, who recommend Chess to their members as their preferred supplier, and we’re Sale Sharks’ preferred fixed line provider so they promote us to all their corporate sponsors and the guests in their hospitality units. Each month we, in turn, rebate to them a percentage of the profits from customers they have introduced to us.”

The majority of customers, making up more than 80 per cent of Chess’s client base, are small and mediumsized enterprises. Others include public sector institutions such as schools and hospitals. While telecoms are now the sole focus of the business, it was not always thus. Pollock, who had spent most of his time since returning from America in the early 1980s as a property developer, set up Chess, named after his children Charlie and Jessie, to service the deregulated water market in 1993 when he began to think about things like school fees.

“I was relatively young and property was a business in which you were either flush with cash or you had a property: it was too up and down, interest rates had hit the glorious 15 per cent, and I felt that I needed a business with recurring revenues.”

In 1995 the company added gas and electricity supply for businesses to its water offering then, in 1998, fellowdirector Bob Rylands suggested making the move into telecoms: “It took us a couple of years to work out how to make any money from telecoms, and we lost a lot of money at first, but you’ve got to persevere.”

Pollock is not, however, afraid to cut his losses. By April 2006 Chess had grown to employ 120 people but, thanks to the disposal of a non-core hardware business and an underperforming Irish operation, the company now has a leaner staff of 86.

In future the business, which plans to continue focusing on the SME market, is looking to two main developments to usher in a new market phase: VOIP and local loop unbundling.

The latter, which began in January 2006 but is still very much at the “gathering pace” stage, will enable suppliers such as Chess to have their own telephone lines rather than relying on the BT network. VOIP remains, meanwhile, a technology for the future, at least for smaller businesses.

“VOIP is fine for big, multi-site corporate networks when it’s basically voice over your own network,” says Pollock. “But the moment you break out into the world wide web, forget it. The quality isn’t there, and look at all the problems you have to do with spam. Put that into a telephone environment and you’ve got a problem.”

Pollock does, however, expect a technical solution to emerge sooner or later – and Chess has its own VOIP system for the day that happens.

“Our biggest challenge over the next five or ten years is going to be catching the VOIP wave when it’s actually here,” he continues. “At the moment it’s just a ripple, but when the wave comes we need to be on it.”

Another question, given Pollock’s growth ambitions, is whether it will be possible for him to maintain the Chess culture of which he is so proud in a potentially much larger organisation.

“I think so,” he says. “You’ve got to be as passionate about it whether you are on one site or ten. But whether we will do that as a business, I don’t know, because we’re spending a lot of money on systems and development so we become much more efficient. And we’re looking at programmes for homeworkers, because we think they’re a huge untapped resource in the UK. A lot of our service is about being on the phone, and we can run that from here with a network of homeworkers around the country.”

Whether those homeworkers will each have their house rearranged by a Chess feng shui consultant remains to be seen.

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